EM ASIA CREDIT: MNI EM Credit Market Wrap - Asia
** The main stories out of the region**
Today U.S. Treasury yields experienced a small uptick, with the 10-year rising to 4.52%, with markets watching for the Fed's rate decision later today. In terms of emerging market $ sovereign bonds, spreads were more less unchanged on the day. As a reminder it's the Luna New Year with most markets effectively closed. No new issues today.
In terms of newsflow, Mercedes -Benz announced it was joining a lawsuit brought by Geely against the EU in protest of tariffs on China EVs. The EV supply chain is very intertwined in Europe, and for now the battery makers are not a target. In China tech, we note that DeepSeek insights are likely to be a net positive for credit, helping to reduce development costs and time, while also bringing a much more capable AI product. JSW Steel announced it was pushing back the closing of its acquisition of coking coal supplier, Minas de Revuboe Limitada (Mozambique), to end June, due to a key lease asset being stripped by the government. The parties are in arbitration. Finally, highly rated (A1/A+) Sun Hung Kai has won the tender for some prime residential real estate in Hong Kong, adding to its land bank.
Best and Worst Performers (zprd, bp)
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GOLD TECHS: Still Looking For Weakness
- RES 4: $2750.0 - High Nov 5
- RES 3: $2730.4 - 76.4% retracement of the Oct 31 - Nov 14 bear leg
- RES 2: $2664.5 - High Dec 16
- RES 1: $2638.6/2726.2 - 20-day EMA / High Dec 12
- PRICE: $2615.6 @ 08:13 GMT Dec 30
- SUP 1: $2583.6 - Low Dec 19
- SUP 2: $2564.4 - Low Nov 18
- SUP 3: $2536.9 - Low Nov 14 and a key support
- SUP 4: $2511.1 - Low Sep 12
Gold traded sharply lower on Dec 18. That move down undermines a recent bullish theme. A resumption of weakness would signal scope for an extension towards the key support at $2536.9, the Nov 14 low. Moving average studies are in a bull mode position highlighting a medium-term uptrend and this suggests that the latest sell-off is likely a correction. Initial pivot resistance is $2638.6, the 50-day EMA. A breach of this EMA would be positive for bulls.
AUDUSD TECHS: Southbound
- RES 4: 0.6471 High Dec 9
- RES 3: 0.6444 50-day EMA
- RES 2: 0.6384 High Dec 13
- RES 1: 0.6274/6323 Low Dec 20 / 20-day EMA
- PRICE: 0.6236 @ 08:08 GMT Dec 30
- SUP 1: 0.6199 Low Dec 19
- SUP 3: 0.6158 1.236 proj of the Sep 30 - Nov 6 - 7 price swing
- SUP 3: 0.6100 Round number support
- SUP 4: 0.6045 1.500 proj of the Sep 30 - Nov 6 - 7 price swing
AUDUSD bears remain in the driver’s seat and the pair is trading closer to latest lows. Recent weakness maintains the price sequence of lower lows and lower highs. Note that moving average studies are in a bear-mode position too, highlighting a dominant downtrend. Scope is seen for an extension towards 0.6158 next, a Fibonacci projection. Initial firm resistance to monitor is 0.6323, the 20-day EMA.
EURJPY TECHS: Has Cleared All Key Retracement Points
- RES 4: 166.69 High Oct 31
- RES 3: 166.18 2.0% 10-dma envelope
- RES 2: 166.10 High Nov 6
- RES 1: 165.04 High Nov 15 and a key short-term resistance
- PRICE: 164.66 @ 08:02 GMT Dec 30
- SUP 1: 163.32 Low Dec 26
- SUP 2: 162.22/159.82 20-day EMA / Low Dec 18
- SUP 3: 158.67 Low Dec 11
- SUP 4: 157.87 Low Dec 09
A bullish condition in EURJPY remains intact and the cross is holding on to its recent gains. Price has breached all the relevant Fibonacci retracement points of the bear leg between Oct 31 - Dec 3. Sights are on 165.04, the Nov 15 high. Clearance of this hurdle would open 166.69, the Oct 31 high and the next major resistance. Initial firm support lies at 162.22, the 20-day EMA. A pullback would be considered corrective.
